Science
Millions of Americans need drugs like Ozempic. Will it bankrupt the healthcare system?
An April 24 letter from Vermont Sen. Bernie Sanders to the CEO of Novo Nordisk began with heartfelt thanks to the Danish drugmaker for inventing Ozempic and Wegovy, two medications poised to improve the health of tens of millions of Americans with obesity and related diseases.
But the senator’s grateful tone faded rapidly.
“As important as these drugs are, they will not do any good for the millions of patients who cannot afford them,” Sanders wrote. “Further, if the prices for these products are not substantially reduced they also have the potential to bankrupt Medicare, Medicaid, and our entire health care system.”
It’s a sentiment that comes up regularly among people who are huge fans of the medications and their close relatives, Eli Lilly’s Mounjaro and Zepbound. All of them work by masquerading as a natural hormone called GLP-1 and tricking the body into slowing digestion and reducing blood sugar.
The medications help patients lose double-digit percentages of their body weight and keep it off — an average of 12.4% in the clinical trial for Wegovy, and an average of 18% at the highest dose in the trial for Zepound. It’s rare for insurance companies to cover GLP-1 drugs for weight loss alone, and Medicare is forbidden by law from doing so. But as the pounds fall, so do the risks of serious problems like type 2 diabetes, hypertension, heart attacks and strokes, and the medications can be covered to prevent these conditions.
“Obesity is a huge public health crisis, and for so long we had no treatments that really made a difference,” said Dr. Lauren Eberly, a cardiologist and health services researcher at the University of Pennsylvania. “These medicines could change the trajectory of your disease and save your life.”
That makes these drugs extremely valuable. Unfortunately, they’re also extremely expensive.
The sticker price for Ozempic, which the Food and Drug Administration approved to treat type 2 diabetes, is more than $12,600 per year. Wegovy, a higher-dose version approved for weight loss in people with obesity and as a way for overweight patients with cardiovascular disease to reduce their risk of heart attack and stroke, retails for nearly $17,600 a year.
Mounjaro and Zepbound mimic GLP-1 as well as a related hormone called glucose-dependent insulinotropic peptide, or GIP. Their list prices add up to roughly $13,900 per year for Mounjaro, which is approved as a diabetes treatment, and about $13,800 per year for Zepbound, the weight-loss version.
Eberly said those prices are simply too high.
“We as a public health medical community — and the community at large — really need to advocate for increased affordability,” she said. “I think we’re overdue for a real reckoning on this.”
In the United States, the tab for these GLP-1 drugs is exorbitant almost any way you look at it.
In 2022, the prescription drug that accounted for the biggest share of Medicare Part D spending was the blood thinner Eliquis. More than 3.5 million beneficiaries used it that year, at a cost of $15.2 billion, the U.S. Department of Health and Human Services says.
That total was more than double the amount spent on the next-costliest drug, the type 2 diabetes medication Trulicity, according to the Centers for Medicare and Medicaid Services, or CMS.
But $15.2 billion is practically a rounding error compared to the $268-billion price tag if Wegovy were to be provided to all 19.7 million Medicare beneficiaries with obesity, researchers estimated in the New England Journal of Medicine.
Even if the drug were prescribed only to Medicare patients with a clinical diagnosis of obesity, the cost would exceed $135 billion. That’s more than the $130 billion Medicare spent on all retail prescription drugs in 2022, according to CMS.
“This is a real budgetary situation for CMS,” said Melissa Barber, a public health economist who studies pharmaceutical policy at Yale School of Medicine. “They’re going to have to deal with this.”
No matter how expensive a drug, it’s “extremely unlikely” that Medicare would actually go bankrupt, a CMS spokesperson said. Spending for the Medicare Part B and Part D programs is reset every year, and if it goes up, beneficiaries and the government share the burden of covering the difference, the spokesperson said.
Sanders offered another perspective. A report released this month by the Senate Health, Education, Labor, and Pensions Committee, which he chairs, noted that Americans get charged $1,349 for a 28-day supply of Wegovy, while the same amount of the medication goes for $186 in Denmark, $137 in Germany and $92 in the United Kingdom.
“The prices for these drugs are so high in the United States that everyone — regardless of whether they use the products or not — will likely be forced to bear the burden of Novo Nordisk’s profit maximizing strategy through higher insurance premiums and taxes,” Sanders wrote in his letter to the company.
The financial impact on Medicare is tempered by a 2003 federal law that prevents the government health insurance program from covering weight-loss medications.The drugs can be added to formularies if prescribed for another “medically accepted indication,” such as to treat type 2 diabetes or reduce heart risk, but patients can’t get it if their only medical issue is obesity.
Rep. Brad Wenstrup (R-Ohio) has introduced a bill that would reverse that 2003 ban. Though the Treat and Reduce Obesity Act has 97 co-sponsors from both sides of the aisle, its financial implications have made it difficult to muster the votes needed for the legislation to advance, he said.
Indeed, Phillip Swagel, director of the Congressional Budget Office, said last month that if the goal was to provide weight-loss drugs without increasing the deficit, their net cost would need to fall by a factor of 10 just to “get in the ballpark.”
Dr. Caroline Apovian, co-director of the Center for Weight Management and Wellness at Brigham and Women’s Hospital in Boston, is concerned that the budget-busting potential of Wegovy and Zepbound has made private health insurers too scared to cover them.
“No insurance company is going to be able to afford to give these lifesaving drugs to the 42% of Americans with obesity,” she said. “So we have to do something.”
Exactly what that something should be is not clear.
One possibility is for the federal government to ask Novo Nordisk and Eli Lilly to discount their GLP-1 drugs. The Inflation Reduction Act empowers Medicare to negotiate lower prices for 10 medicines each year, and researchers in the Congressional Budget Office expect at least some GLP-1s to make the list “within the next few years.”
Private insurers are free to seek deals of their own, and the similarities between the Novo Nordisk and Eli Lilly drugs give insurers quite a lot of bargaining power, said John Cawley, a health economist at Cornell.
“They should be more effective at playing them off each other,” Cawley said. “They can say, ‘We’re only going to cover one of these. Which do you want to be, the one we cover or the one we don’t?’”
There’s reason to think the drugmakers could afford to offer significant discounts if they were so inclined.
Novo Nordisk charges Americans $968.52 for a 28-day supply of Ozempic, regardless of whether the dose of the active ingredient semaglutide is 0.5, 1 or 2 milligrams per injectable pen. Likewise, Wegovy is priced at $1,349.02 every 28 days, no matter whether the weekly injections contain 0.25, 0.5, 1, 1.7 or 2.4 mg of semaglutide.
Yet a 2022 report in the journal Obesity estimated that a 2.4-mg weekly dose of semaglutide could be made for “about $40” a month.
Barber is part of a team that also examined what it would cost to produce various diabetes drugs using methods designed to keep prices low. Her group calculated that a 30-day supply of an injectable medicine with 0.77 milligrams of semaglutide could be manufactured for as little as 89 cents, a total that includes a 10% profit. Even with higher costs and a 50% profit, the drug could be made for $4.73 a month, the team reported in March in JAMA Network Open.
“They could be very affordable,” Barber said.
A spokeswoman for Novo Nordisk said the company was “unaware of the analysis” used in the study, but it recognizes the need to find ways to make its products more affordable. She also said the company is reviewing the report from Sanders’ Senate committee and noted that “75% of our gross US sales goes to rebates and discounts reimbursed to insurance companies and other payers.”
Representatives from Eli Lilly did not comment on the cost of its drugs.
If manufacturers don’t agree to reduce prices voluntarily, the federal government could take more forceful steps. The Inflation Reduction Act put a $35-a-month limit on what seniors with Medicare Part D plans need to pay for insulin. Congress could set a limit on GLP-1 drug prices too, though that would be “a last resort,” said Lawrence Gostin, an authority on public health law at Georgetown University.
Rationing the drugs is another way to keep spending in check, health economists say. High sticker prices have limited access to the drugs, often making income a determining factor in deciding who can take them and who must go without. But there are other ways to prioritize patients.
A person with a “healthy weight” — defined as a body mass index between 18.5 and 24.9 — incurs about $2,780 a year in healthcare costs, on average. That figure rises by $2,781 for a person with a BMI of 30 or above , according to the 2024 edition of “The Handbook of Obesity.”
Most of those added costs are concentrated among people at the higher end of the BMI curve. Someone with a BMI between 35 and 39.9 requires $3,336 in additional health spending per year, on average, while a person with a BMI of 40 or above needs an extra $6,493 in medical care.
“If your goal is to target interventions in order to reduce healthcare spending, you’d want to target it to people with more extreme or morbid obesity,” said Cawley, who co-wrote the handbook’s chapter on obesity’s economic toll.
Even if all else fails, prices are bound to fall over a period of years as new drugs win FDA approval and make the market more competitive, economists said. And once generic versions become available, prices will plummet. That’s what happened with pricey medications for hepatitis C and HIV.
“Eventually things become generic,” Wenstrup said. “They still do the same thing but it costs less.”
For the last few years, the Marine Mammal Center has been testing any patients with bird-flu-like symptoms, which include respiratory and neurological problems, for the virus.
California lawmakers are taking aim at proposed rules to implement a state law aimed at curbing plastic waste, saying the draft regulations proposed by CalRecycle undermine the letter and intent of the legislation.
In a letter to Gov. Gavin Newsom and two of his top administrators, the lawmakers said CalRecycle exceeded its authority by drafting regulations that don’t abide by the terms set out by the law, Senate Bill 54.
“While we support many changes in the current draft regulations, we have identified several provisions that are inconsistent with the governing statute … and where CalRecycle has exceeded its authority under the law,” the lawmakers wrote in the letter to Newsom, California Environmental Protection agency chief Yana Garcia, and Zoe Heller, director of the state’s Department of Resources Recycling and Recovery, or CalRecycle.
The letter, which was written by Sen. Catherine Blakespear (D-Encinitas) and Sen. Benjamin Allen (D-Santa Monica), was signed by 21 other lawmakers, including Sen. John Laird (D-Santa Cruz) and Assemblymembers Al Muratsuchi (D-Rolling Hills Estates) and Monique Limón (D-Goleta).
CalRecycle submitted informal draft regulations two weeks ago that are designed to implement the law, which was authored by Allen, and signed into law by Newsom in 2022.
The lawmakers’ concerns are directed at the draft regulations’ potential approval of polluting recycling technologies — which the language of the law expressly prohibits — as well as the document’s expansive exemption for products and packaging that fall under the purview of the U.S. Department of Agriculture and the Food and Drug Administration.
The inclusion of such blanket exemptions is “not only contrary to the statute but also risks significantly increasing the program’s costs,” the lawmakers wrote. They said the new regulations allow “producers to unilaterally determine which products are subject to the law, without a requirement or process to back up such a claim.”
Daniel Villaseñor, a spokesman for the governor, said in an email that Newsom “was clear when he asked CalRecycle to restart these regulations that they should work to minimize costs for small businesses and families, and these rules are a step in the right direction …”
At a workshop held at the agency’s headquarters in Sacramento this week, CalRecycle staff responded to similar criticisms, and underscored that these are informal draft regulations, which means they can be changed.
“I know from comments we’ve already been receiving that some of the provisions, as we have written them … don’t quite come across in the way that we intended,” said Karen Kayfetz, chief of CalRecycle’s Product Stewardship branch, adding that she was hopeful “a robust conversation” could help highlight areas where interpretations of the regulations’ language differs from the agency’s intent.
“It was not our intent, of course, to ever go outside of the statute, and so to the extent that it may be interpreted in the language that we’ve provided, that there are provisions that extend beyond … it’s our wish to narrow that back down,” she said.
These new draft regulations are the expedited result of the agency’s attempt to satisfy Newsom’s concerns about the law, which he said could increase costs to California households if not properly implemented.
Newsom rejected the agency’s first attempt at drafting regulations — the result of nearly three years of negotiations by scores of stakeholders, including plastic producers, package developers, agricultural interests, environmental groups, municipalities, recycling companies and waste haulers — and ordered the waste agency to start the process over.
Critics say the new draft regulations cater to industry and could result in even higher costs to both California households, which have seen large increases in their residential waste hauling fees, as well as to the state’s various jurisdictions, which are taxed with cleaning up plastic waste and debris clogging the state’s rivers, highways, beaches and parks.
The law is molded on a series of legislative efforts described as Extended Producer Responsibility laws, which are designed to shift the cost of waste removal and disposal from the state’s jurisdictions and taxpayers to the industries that produce the waste — theoretically incentivizing a circular economy, in which product and packaging producers develop materials that can be reused, recycled or composted.
As promised, federal health officials have dropped longstanding recommendations that healthy children and healthy pregnant women should get the COVID-19 vaccines.
“The COVID-19 vaccine schedule is very clear. The vaccine is not recommended for pregnant women. The vaccine is not recommended for healthy children,” the U.S. Department of Health and Human Services said in a post on X on Friday.
In formal documents, health officials offer “no guidance” on whether pregnant women should get the vaccine, and ask that parents talk with a healthcare provider before getting the vaccine for their children.
The decision was done in a way that is still expected to require insurers to pay for COVID-19 vaccines for children should their parents still want the shots for them.
The new vaccine guidelines were posted to the website of the U.S. Centers for Disease Control and Prevention late Thursday.
The insurance question
It wasn’t immediately clear whether insurers will still be required under federal law to pay for vaccinations for pregnant women.
The Trump administration’s decision came amid criticism from officials at the nation’s leading organizations for pediatricians and obstetricians. Some doctors said there is no new evidence to support removing the recommendation that healthy pregnant women and healthy children should get the COVID vaccine.
“This situation continues to make things unclear and creates confusion for patients, providers and payers,” the American College of Obstetricians and Gynecologists said in a statement Friday.
Earlier in the week, the group’s president, Dr. Steven Fleischman, said the science hasn’t changed, and that the COVID-19 vaccine is safe during pregnancy, and protects both the mom-to-be and their infants after birth.
“It is very clear that COVID-19 infection during pregnancy can be catastrophic,” Fleischman said in a statement.
Dr. Susan Kressly, president of the American Academy of Pediatrics, criticized the recommendation change as being rolled out in a “conflicting, confusing” manner, with “no explanation of the evidence used to reach their conclusions.”
“For many families, the COVID vaccine will remain an important way they protect their child and family from this disease and its complications, including long COVID,” Kressly said in a statement.
Some experts said the Trump administration should have waited to hear recommendations from a committee of doctors and scientists that typically advises the U.S. Centers for Disease Control and Prevention on immunization recommendations, which is set to meet in late June.
California’s view
The California Department of Public Health on Thursday said it supported the longstanding recommendation that “COVID-19 vaccines be available for all persons aged 6 months and older who wish to be vaccinated.”
The changes come as the CDC has faced an exodus of senior leaders and has lacked an acting director. Typically, as was the case during the first Trump administration and in the Biden administration, it is the CDC director who makes final decisions on vaccine recommendations. The CDC director has traditionally accepted the consensus viewpoint of the CDC’s panel of doctors and scientists serving on the Advisory Committee on Immunization Practices.
Even with the longstanding recommendations, vaccination rates were relatively low for children and pregnant women. As of late April, 13% of children, and 14.4% of pregnant women, had received the latest updated COVID-19 vaccine, according to the CDC. About 23% of adults overall received the updated vaccine, as did 27.8% of seniors age 65 and over.
The CDC estimates that since October, there have been 31,000 to 50,000 COVID deaths and between 270,000 and 430,000 COVID hospitalizations.
Here are some key points about the CDC’s decision:
New vaccination guidance for healthy children
Previously, the CDC’s guidance was simple: everyone ages 6 months and up should get an updated COVID vaccination. The most recent version was unveiled in September, and is officially known as the 2024-25 COVID-19 vaccine.
As of Thursday, the CDC, on its pediatric immunization schedule page, says that for healthy children — those age 6 months to 17 years — decisions about COVID vaccination should come from “shared clinical decision-making,” which is “informed by a decision process between the healthcare provider and the patient or parent/guardian.”
“Where the parent presents with a desire for their child to be vaccinated, children 6 months and older may receive COVID-19 vaccination, informed by the clinical judgment of a healthcare provider and personal preference and circumstances,” the CDC says.
The vaccine-skeptic secretary of Health and Human Services, Robert F. Kennedy Jr., contended in a video posted on Tuesday there was a “lack of any clinical data to support the repeat booster strategy in children.”
However, an earlier presentation by CDC staff said that, in general, getting an updated vaccine provides both children and adults additional protection from COVID-related emergency room and urgent care visits.
Dr. Peter Chin-Hong, a UC San Francisco infectious diseases expert, said he would have preferred the CDC retain its broader recommendation that everyone age 6 months and up get the updated vaccine.
“It’s simpler,” Chin-Hong said. He added there’s no new data out there that to him suggests children shouldn’t be getting the updated COVID vaccine.
A guideline that involves “shared decision-making,” Chin-Hong said, “is a very nebulous recommendation, and it doesn’t result in a lot of people getting vaccines.”
Kressly, of the American Academy of Pediatrics, said the shared clinical decision-making model is challenging to implement “because it lacks clear guidance for the conversations between a doctor and a family. Doctors and families need straightforward, evidence-based guidance, not vague, impractical frameworks.”
Some experts had been worried that the CDC would make a decision that would’ve ended the federal requirement that insurers cover the cost of COVID-19 vaccines for children. The out-of-pocket cost for a COVID-19 vaccine can reach around $200.
New vaccine guidance for pregnant women
In its adult immunization schedule for people who have medical conditions, the CDC now says it has “no guidance” on whether pregnant women should get the COVID-19 vaccine.
In his 58-second video on Tuesday, Kennedy did not explain why he thought pregnant women should not be recommended to get vaccinated against COVID-19.
Chin-Hong, of UCSF, called the decision to drop the vaccination recommendation for pregnant women “100%” wrong.
Pregnancy brings with it a relatively compromised immune system. Pregnant women have “a high chance of getting infections, and they get more serious disease — including COVID,” Chin-Hong said.
A pregnant woman getting vaccinated also protects the newborn. “You really need the antibodies in the pregnant person to go across the placenta to protect the newborn,” Chin-Hong said.
It’s especially important, Chin-Hong and others say, because infants under 6 months of age can’t be vaccinated against COVID-19, and they have as high a risk of severe complications as do seniors age 65 and over.
Not the worst-case scenario for vaccine proponents
Earlier in the week, some experts worried the new rules would allow insurers to stop covering the cost of the COVID vaccine for healthy children.
Their worries were sparked by the video message on Tuesday, in which Kennedy said that “the COVID vaccine for healthy children and healthy pregnant women has been removed from the CDC recommended immunization schedule.”
By late Thursday, the CDC came out with its formal decision — the agency dropped the recommendation for healthy children, but still left the shot on the pediatric immunization schedule.
Leaving the COVID-19 vaccine on the immunization schedule “means the vaccine will be covered by insurance” for healthy children, the American Academy of Pediatrics said in a statement.
How pharmacies and insurers are responding
There are some questions that don’t have immediate answers. Will some vaccine providers start requiring doctor’s notes in order for healthy children and healthy pregnant women to get vaccinated? Will it be harder for children and pregnant women to get vaccinated at a pharmacy?
In a statement, CVS Pharmacy said it “follows federal guidance and state law regarding vaccine administration and are monitoring any changes that the government may make regarding vaccine eligibility.” The insurer Aetna, which is owned by CVS, is also monitoring any changes federal officials make to COVID-19 vaccine eligibility “and will evaluate whether coverage adjustments are needed.”
Blue Shield of California said it will not change its practices on covering COVID-19 vaccines.
“Despite the recent federal policy change on COVID-19 vaccinations for healthy children and pregnant women, Blue Shield of California will continue to cover COVID-19 vaccines for all eligible members,” the insurer said in a statement. “The decision on whether to receive a COVID-19 vaccine is between our member and their provider. Blue Shield does not require prior authorization for COVID-19 vaccines.”
Under California law, health plans regulated by the state Department of Managed Health Care must cover COVID-19 vaccines without requiring prior authorization, the agency said Friday. “If consumers access these services from a provider in their health plan’s network, they will not need to pay anything for these services,” the statement said.
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